But even those deals were made at least three years ago when it was far more likely for a bank to fail than be acquired.

The Union Bank-Pacific Capital
PCBC, +1.52%
merger would be the biggest since Capital One Financial Corp.
COF, -1.09%
acquired ING Direct USA for $9 billion last year, but that’s the only multi-billion deal announced since PNC Financial Services Group
PNC, +1.35%
bought National City for $5.08 billion in late 2008.

The reason for a dearth of bank deals was, of course, the financial crisis. After missteps by Bank of America Corp.
BAC, -0.19%
and others, banks became more inclined to focus on their own capital levels rather than spend on expansion. Those banks that considered deals never knew how sound the balance sheets of their targets were.

Now, four years after the worst of the crisis, that outlook is changing. Stronger banks, such as Union Bank which is owned by Japan’s Mitsubishi UFJ Financial
MTU, -2.45%
is willing to take the risk.

There were 142 bank failures in 2009, 157 in 2010, 92 in 2011. By contrast, only 13 banks have failed this year, according to the Federal Deposit Insurance Corp.

By now, most of the bad banks have closed or disappeared. As bank CEOs perceive that bad banks have been tossed out, more will look toward buying rivals on the cheap — bank stocks fell nearly 30% last year — it may make banking M&A one of the stronger deal markets in the next couple of years.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.